Americans Earn and Spend More, But Save Less in July

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Americans' personal income ticked up slightly in July by 0.2%, according to the Bureau of Economic Analysis. And personal spending rose even more quickly -- by 0.4%. While both of these results are somewhat good news for the recovery, they're not great.

Let's start with a chart for personal income and spending:

income and spending2010-07.png

You can see that July was certainly a better month than June for income growth, but it was otherwise the weakest since February. Spending growth, however, was the highest we've seen since March.

But how did spending increase twice as quickly as income? Americans saved less. Here's the chart for saving:

personal saving 2010-07.png

July had the biggest decline in spending since February, as the downward saving growth trend has now gone negative.

This data shows a few things. First, it's nice to see income grow again, after being flat in June. But a 0.2% increase is pretty weak, at best. Second, generally, it looks like sentiment picked up in July. Americans spent more and saved less, indicating that they're probably less nervous about their economic situation.

Overall, today's data is bittersweet. Spending increased, in part due to higher income, but also because Americans saved less. A better result would be all three figures increasing. But at this point, even lukewarm news is certainly better than additional grim indicators.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
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